Tuesday, December 3, 2013
4:18 PMTime to panic over Brazil?
- “Brazil’s capital markets appear to be suffering from a sudden flight of capital," says Michael Shaoul, warning of a danger of "abrupt collapse in investor confidence ... Brazil should be watched closely in the days ahead."
- The Bovespa slid another 1.75% today, but more alarmingly, the country's 10-year yield spread (vs. the U.S.) shot to its highest level since the summer of 2009.
- This morning, Q3 GDP was reported to have contracted by 0.5%, worse than expectations. From Capital Economics: "Brazil is not particularly attractive to foreign firms ... Woefully low domestic savings mean that Brazil relies on attracting foreign capital in order to fund investment projects. But with the current account already in a significant deficit, there is little scope for running up an even larger external deficit to fund investment."
- Off 1.3% today, the iShares MSCI Brazil Index ETF (EWZ) is down 20% YTD.
- ETFs: EWZ, BRF, BZF, BRXX, EWZS, BRAQ, BRAZ, BZQ, BRAF, UBR, BRZU, FBZ, BRZS, DBBR
2:29 PMMore on Toyota's November U.S. Auto Sales
- Toyota (TM) reports a late-month rush of sales helped it blast past the estimates of analysts for November. During the Thanksgiving weekend, sales rose 35% Y/Y.
- The Toyota division saw sales increase 9.7% to 152,433 - while sales at Lexus rose 12.7% to 25,611.
- Sales by model: Camry +5.6% to 30,386; Corolla -4.6% to 22,434; Prius -6% to 16,129; Highlander +17.2% to 11,544; Tundra +20.5% to 10,010.
2:12 PMU.S. auto sales strong but promotions a concern
- Though it's clear that automobile sales in the U.S. are booming as the industry brushed aside a tough Superstorm Sandy-boosted comparison to topple the sales estimates of analysts, the level of promotional activity used to pull off the feat is up for debate
- Truecar.com estimates the average transaction price for major automakers declined by 0.6% Y/Y to $30,634. However, a survey by Kelley Blue Book shows General Motors (GM -3.4%) and Nissan (NSANY -0.8%) were able to raise their average sale price in November compared to a year ago.
- Execs with Ford (F -3.2%) and Volkswagen (VLKAY -2.1%) both cited increased incentive activity during the month, but an increase in the mix of high-margin truck sales at many automakers could counterbalance the promotional fever.
- Sales reports: GM, Ford, Volkswagen, Nissan, Chrysler, Toyota, Honda.
1:46 PMHonda November U.S. Auto Sales
- Honda (HMC) unit sales -0.1% to miss the consensus estimate of analysts calling for a 0.5% rise.
- The Honda division saw sales fall 2.3% during the month while sales jumped 18.9% at the Acura division with the MDX and RLX/RL selling well.
- Sales for the Honda Accord, recently named 2014 Green Car of the Year, rose 3.2% to 27,093.
12:48 PMToyota November U.S. Auto Sales| Comment!
10:46 AMVolkswagen November U.S. Sales| 1 Comment
9:49 AMOil majors near agreement on cuts to Iraqi production targets
- Iraq is close to agreeing to lower production targets to peak output at the giant West Qurna-1 field, operated by Exxon Mobil (XOM), demonstrating the challenges global oil majors face in trying to raise goals for Iraq's big southern oil fields.
- The new target for West Qurna-1 will be 1.6M-1.8M bbl/day, more than a third lower than the current 2.8M bbl/day target, the Iraq oil minister says.
- The government also is said to be close to agreeing to lower production targets for two other major fields: Rumaila, operated by BP, and Majnoon, operated by Royal Dutch Shell (RDS.A, RDS.B).
9:36 AMThai shares rally as police ordered not to confront protesters| Comment!
8:56 AMBrazil Q3 GDP slips 0.5%
- Brazil's Q3 GDP contracts 0.5%, missing estimates of a 0.3% contraction, and the worst performance since 2011 Q3. On a Y/Y basis, the economy grew 2.2%. The decline in Q3 was led by agriculture, which fell 3.5%. Investment also declined 2.2%.
- The news adds to complications for President Rousseff who is up for election next year. Her government has already slashed by nearly half its forecast for robust 4.5% growth in 2013.
- The central bank last week continued its rate-hike cycle, but gave indications a pause could be coming soon, and the slow GDP report is unlikely to change that view.
- Brazil ETFs: EWZ, BRF, BZF, BRXX, EWZS, BRAQ, BRAZ, BZQ, BRAF, UBR, BRZU, FBZ, BRZS, DBBR
8:43 AMMore on Chrysler's November U.S. sales haul
- Chrysler's (FIATY) performance in the U.S. was strong in November as the automaker saw new models perform well. Truck sales during the month rose 26% to 108,308 units while car sales fell 7% to 33,967.
- Brand sales growth: Ram +25%; Chrysler +12%; Dodge +4%; Fiat -15%; Jeep +30%.
- The automaker saw broad sales increases with Jeep as the Grand Cherokee, Wrangler, Patriot, and Compass models each knocked out Y/Y gains. The Town & Country minivan was also a hot seller during the month, up 70% Y/Y to 11,288 units.
- An inventory level of 91 days supply hasn't gone unnoticed by analysts as Chrysler now has more pressure to either sell like mad in December and January or trim late-year production.
8:21 AMChrysler November U.S. Sales
- Chrysler's (FIATY) unit sales +16% to 142,275, to mark the best sales haul for the month since 2007.
- The automaker's sales total bested estimates calling for a 10%-14% gain, but the late-month level of promotions used to spur buying will be closely watched by analysts.
- The Jeep Cherokee SUV came in strong during the month with sales of 10,169 units.
- The automaker cites a 91-day supply of vehicles.
8:00 AMAdidas backs 2015 targets after recent sales slip
- Adidas (ADDYY) says it will stick with its 2015 targets of sales of €17B ($23B) and an operating margin of 11%.
- A lackluster Q3 report from the German company which paled to Nike's performance during the same period had raised the issue of its future growth track.
- For 2014, Adidas says sales will grow in a high single-digit pace and operating margin will be improved by a percentage point.
7:42 AMLong China/short copper Goldman idea #4 for 2014
- Very little "China upside" has been priced in, says Goldman analyst Noah Weisberger, noting Asian-focused funds are "significantly underweight" China. His team is forecasting a big 19% gain in Chinese equities traded in Hong Kong next year.
- Goldman is pairing its long-China call with a short on copper (JJC) due to "abundant supply and a lack of accelerating demand."
- The long/short idea is #4 in Goldman's list of top trade ideas for 2014. Previous ideas are here.
- Chinese ETFs: FXI, PGJ, GXC, FXP, HAO, CYB, YINN, CNY, TAO, CHIQ, CHIX, MCHI, YANG, PEK, CQQQ, XPP, QQQC, DSUM, YAO, CHXX, ASHR, CHII, CHXF, FXCH, ECNS, CHIE, YXI, CHIM, KWEB, KFYP, TCHI, FCA, CHLC, CHNA
7:01 AMFiat readies to bring Jeep Cherokee to China| Comment!
5:27 AMWorld stocks fall on apprehension about Fed tapering
- Global equities are mostly lower, with fears of the taper being cited as the reason following decent U.S. economic data yesterday.
- However, not everyone's buying thesis. "Speculation that the Fed could start trimming its stimulus in December shouldn't stress equities excessively," says UniCredit strategist Christian Stocker. The economy is recovering, which "is a prerequisite for further gains in equities."
- Chinese shares buck the trend and rise 0.7%, helped by a drop in money-market rates, which eases concerns of a cash squeeze. The Nikkei also closes up, apparently boosted by a weaker yen.
- Japan +0.6%, Hong Kong -0.5%, India -0.2%.
- London -0.6%, Paris -1.4%, Frankfurt -0.8%.
- U.S. stock futures: Dow -0.2%, S&P -0.2%, Nasdaq flat.
4:59 AMYuan overtakes euro for trade finance
- The Chinese yuan has passed the euro to become the second-most used currency in global trade finance, the Society for Worldwide Interbank Financial Telecommunication (Swift) says.
- The renminbi took an 8.66% share of letters of credit and collections in October vs 6.64% for the euro.
- The yuan's rise has been rapid, with its share in January 2012 just 1.89%.
- The trend indicates that China's attempts to internationalize the currency, such as loosening forex controls, have been successful. The government intends to take more steps as part of a major economic reform plan.
- ETFs: FXE, EUO, ERO, CYB, CNY, DRR, FXCH, EUFX, ULE, URR
4:43 AMU.K. construction activity continues to power ahead
- U.K. construction PMI unexpectedly climbed to a six-year high of 62.6 in November from 59.4 in October and belied consensus for a fall to 59.
- Overall business activity rose for the seventh month in a row as new orders and employment increased sharply, while residential construction growth was the strongest for ten years.
- However, Markit notes that construction is recovering from a low base because of a deep and protracted double-dip recession that only ended in the summer.
- "There is still a huge loss of output to recoup before the sector reaches its pre-recession peak," Markit says.
- The pound is +0.3% at $1.6406, although the FTSE 100 is -0.5%. (PR)
3:54 AMSpain unemployment drops for first time in November
- The number of Spaniards filing for jobless benefits unexpectedly dropped for the first time in November on a monthly basis, falling by 2,475 to 4.81M.
- The decline stands in contrast to a rise of 87,000 in October and consensus for an increase of 44,300 in November.
- On year, the number dropped 98,909.
- The IBEX 35 (EWP) is -0.3%. (PR)
3:14 AMJudge to decide whether Detroit can enter Chapter 9
- U.S. Bankruptcy Judge Steven Rhodes is due to decide today on whether Detroit is eligible for bankruptcy protection.
- Should Rhodes approve Detroit's request, the city would be protected from lawsuits in several courts, including over a plan to cut retiree benefits. It would also prevent creditors from suing to seize assets after Detroit defaulted on loan payments.
- Meanwhile, Illinois' House and Senate are set to vote on a proposed overhaul of the state's retirement system, one of the most underfunded in the country with a gap of almost $100B.
- The measures would save an estimated $160B over 30 years with cuts for workers and retirees but would fully fund the state's five pension systems by 2044. However, unions are deeply opposed to the legislation and its passage is not certain.
- ETFs: MUB, HYD, BAB, PZA, MUNI, TFI, ITM, HYMB, MLN, BABZ, BABS, XMPT, SHM, SUB, PRB, SMB, PVI, SMMU, MUAF, MUAG, MUAE, MUAD, MUAC, VRD, GMMB, RVNU